The Australian government has passed additional private health insurance reforms that will take effect in April 2019. While one of the goals was to simplify the insurance language and concepts, we know that trying to understand the reforms and their impact itself might be challenging and confusing so we put together a one-pager for you.

These reforms were created in hopes that they will increase competition insurers and drive down premiums and fees as well as making comparison easier through simpler, standardised definitions.

Before we dig into what to expect in 2019, let’s first quickly review key changes from 2018 just in case you missed them.

Greater access to mental health services by removing the 2-month waiting period that was required after you upgrade your hospital cover to access higher benefits for psychiatric treatments (since April 2018)

Now let’s take a look at what health insurance changes await you in 2019.

New Product Tiers of Hospital Covers: Basic, Bronze, Silver, Gold

The Australian government refined and clarified clinical categories and their definitions. Using these new categories, they created 4 product tiers for hospital treatment – basic, bronze, silver and gold – and outlined the new minimum requirements of cover for each tier in the Private Health Insurance (Reforms) Amendment Rules 2018.

This means starting April, many of the 70,000 existing policies will fall into new tiers. Many so-called ‘junk policies’ could be scrapped.

The new segmentation of minimum products is meant to allow insurers more opportunities to differentiate their benefits/packages and to make comparing different health funds easier, which hopefully would lead to stronger competition.

These new tiers are not applicable to extras covers. For the combined packages of the hospital and general treatment covers, separate ratings will apply to each component of the package.

Basic tier has the least number of clinical categories required to be covered on a restricted basis. The rest of the clinical categories could be offered by insurers either on a restricted or unrestricted basis. Bronze and silver offer more categories covered on an unrestricted basis at a minimum and similarly to the basic tier, the rest is up to the insurers to offer. However, the difference is that if insurers do decide to offer, they have to do so on an unrestricted basis. And for gold, as you can guess, covers everything on an unrestricted basis.

Good news for women – all necessary breast surgeries and gynaecology will be included in the minimum requirements for the bronze tier and above.

Here’s the summary of examples in each tier:

Basic: Only rehabilitation, hospital psychiatric services, and palliative care categories as minimum restricted coverage required (no category required to be offered on an unrestricted basis). Everything else is up to the health funds to be offered either on an unrestricted or restricted basis.

Bronze:Includes the same minimum requirements of the basic tier. It also includes 18 categories that must be offered on an unrestricted basis such as brain and nervous system, eyes, bone/muscles, kidneys, digestive system, gynaecology, termination of pregnancy, chemotherapy, necessary breast surgery, and diabetes.

Silver: Includes the same minimum requirements of both the basic and silver tier. It also covers 8 more categories of unlimited coverage such as heart, lung/chest, blood, back pain, medically necessary plastic surgery, dental surgery, and hearing devices.

Gold: Requires all categories to be offered on an unrestricted basis. Gold-only categories include cataracts, joint replacement, dialysis, pregnancy, and weight loss surgery.

Changes to Coverage for Natural Therapies

Starting from 1 April 2019, certain natural therapies will be removed from private health insurance coverage, meaning that they will no longer receive the private health insurance rebate as part of a general-treatment policy.

Insurers will not be able to offer benefits for these therapies without being non-compliant. However, they are permitted to offer incentives for services provided by a natural therapist instead as long as they meet the requirements defined by the Private Health Insurance Complying Product Rules.

This change came due to the review chaired by the former Commonwealth Chief Medical Officer which concluded that there is no evidence demonstrating the efficacy of natural therapies. The government believed that by removing the costs of “unnecessary” treatment from the system could put downward pressure on premiums.

Discounts for Young Australians

To encourage younger people to get private health insurance early, Australians aged 18-29 years will be offered 2 per cent discount for each year they are under 30 (to be capped at 10% for 18-25 year-olds). They will be able to keep the annual discount on premiums until they turn 40.

April 2019, Australians aged 18-29 years can expect insurers to offer you two per cent for each year they are under 30, to be capped at 10 per cent for 18 to 25-year-olds. See the full outline of the reform here.

Improved Support for Australians in Remote and Rural Areas

In the past, Australians living in remote and rural areas could not get travel and accommodation benefits as part of the hospital treatment cover (only as extras cover) to access treatment in a far-away facility. That is going to change as the government will now allow insurers to offer travel and accommodation benefits in their hospital products.

New Excess Levels, More Options

The government will increase the permitted excess levels (the portion you must pay upfront towards the hospital bill) for hospital policies to $750 for singles and $1,500 for couples and families. You will be able to choose a higher excess amount on certain insurance products which will help reduce premiums and premium hikes.

Some Other Announcements about 2019

A few major health insurance companies announced what their premium increases would be in 2019. Here’s what we know so far[2]:

Medibank and ahm health insurance will increase premiums by an average of 3.3% starting 1 April 2019 (which would be the lowest average premium hike in 18 years

nib health insurance will increase by 3.38%

GU Health Insurance will increase by 1.80% starting 1 April 2019

In addition, the Department of Health announced that they expect to reduce prosthesis and device benefits will also occur in February of this year and next year.

Contact your insurer to see how these changes will affect your current health insurance policy or speak to our agent to better understand if and how these changes could give you opportunities for better coverage!

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